Today the Office of Federal Housing Enterprise Oversight (OFHEO) released its latest estimates of house prices in the US, covering the first quarter of 2005. Unsurprisingly, house prices continue to go up.

WASHINGTON, D.C. – Average U.S. home prices increased 12.50 percent from the first quarter of 2004 through the first quarter of 2005. Appreciation for the most recent quarter was 2.21 percent, or an annualized rate of 8.82 percent. The new data represent the largest four quarter increase since the third quarter of 2004, when appreciation surpassed any increase in over 25 years. The figures were released today by OFHEO Acting Director Stephen A. Blumenthal, as part of the House Price Index (HPI), a quarterly report analyzing housing price appreciation trends.

“The House Price Index shows the rise in house prices continues at an extremely strong pace and raises the potential for declines in some areas later on,” said OFHEO Chief Economist Patrick Lawler.

Looking at the national average of house prices makes little sense, however; I think that a much better gauge of the behavior of house prices can be found with regional housing markets. The following graph shows inflation-adjusted house prices in several metropolitan areas over the past 30 years.

Note: house prices are deflated by the “CPI less shelter” price index.

In many major markets, houses are now roughly twice as expensive as they were in 1995, in inflation-adjusted terms. And the rate of increase in recent years is… quite high.